Common Benefit Reduction Formulas Found in Group Life Insurance

The master contract will often contain a reduction formula. This provision reduces the coverage of those insureds who reach a certain age (age seventy is typical). Age discrimination laws (such as the Age Discrimination in Employment Act – ADEA) have slowed down the reduction so that a common clause might provide that, “Benefits reduce to 65 percent of original amount at age seventy and 50 percent of original amount at age seventy-five.”

Reproduced with permission.  Copyright The National Underwriter Co. Division of ALM

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